Chile's Fiscal Credibility Crisis Clashes With Corporate Deal Surge

Chile's economy presents a contradictory picture today: the mergers and acquisitions market is posting its strongest first half in three years, the stock market is regaining ground, and the private sector is rolling out ambitious bets on transformation — all while the peso heads toward its longest depreciation streak since 2018, unemployment ranks among the worst in the OECD, and the credibility of the fiscal framework faces an explicit warning from Moody's.

The dollar was trending higher for the eighth consecutive session against the peso, according to Diario Financiero, in a move that defies immediate logic: the global dollar index was retreating, copper was clawing back ground, and short-dated U.S. rates were easing. The resilience of the greenback locally points to homegrown structural factors — fiscal uncertainty, political noise, and a risk premium the market has yet to fully digest. The IPSA, meanwhile, was climbing toward 10,800 points, lifted in part by airlines after the slump in Brent crude, which fell 4.5% to US$71.9 per barrel as traffic through the Strait of Hormuz normalized despite an attack on a container ship near Oman. The drop in oil also foreshadows another roughly $100 cut in gasoline prices, though Central Bank Vice President Alberto Naudon warned that "we are likely to be left with prices somewhat higher than those we had before the war."

It is precisely fiscal fragility that is generating the most unease among institutional players. Moody's published a critical analysis of the government's new budgetary trajectory, noting that the target of reaching a deficit of 1.5% of GDP by 2030 is "significantly weaker" than the path recommended by the Autonomous Fiscal Council, which calls for a surplus of 1% of GDP over the same horizon. The rating agency stressed that last year's fiscal deviation exceeded the revised target by more than two percentage points of GDP, attributed mainly to an overestimation of revenue from the anti-evasion law. For Moody's, compliance with fiscal commitments will be "fundamental" if Chile is to preserve its credit rating, following several years of credibility erosion. Against that backdrop, tension between Finance Minister Jorge Quiroz and the rest of the cabinet is palpable: Housing Minister Iván Poduje quipped publicly from Temuco that he has "a finance minister who won't give me a peso," while the opposition is playing fresh cards calling for negotiations on the mega-reform for reconstruction and reactivation, which the Senate has already approved in general terms by a narrow majority.

Within that climate of restraint, the government is betting on an alternative financing avenue: the sale of state-owned assets. Bienes Nacionales is preparing a first package of 350 properties, concentrated in the Metropolitan, Antofagasta, Biobío and Tarapacá regions, with the tender slated for late 2026. The Undersecretariat of Economy has identified 634 additional assets and is working on the methodological framework. In parallel, the Ministry of Public Works announced at the infrastructure seminar hosted by Banco Santander and Diario Financiero that it will seek to quadruple the pace of concession investment, extending the pipeline to schools, police stations and digital connectivity. AFP Habitat, however, warned at the same forum that the stock tender under the pension reform "penalizes differentiation" among fund managers — a signal that the tensions between investment urgency and financial-system incentives remain unresolved.

The private sector, meanwhile, is pushing ahead with its own reconfiguration agenda. According to PwC, the M&A market tallied 65 transactions worth nearly US$2.9 billion in the first half of 2026, its strongest performance since 2023, in a sign that risk capital is starting to move again. Cencosud is at the center of the most structural shift: the acquisition of Brazilian chain St. Marche consolidates a cycle of purchases and divestments that analysts read as the holding company pivoting from expansion to profitability, reinforced by the Fiscalía Nacional Económica's unconditional approval of two new stores in Santiago. In the wine world, the Von Appen family — controllers of Ultramar — bought the TerraPura brand from the Matetic family, another transaction reflecting the consolidation underway in traditional sectors. On the technology front, Mercado Libre appointed Matías Spagui as interim operations lead in Chile following the departure of Alan Meyer, while Chinese automaker Lepas, part of the Chery Group, confirmed its arrival in the local market in the second half with an opening lineup of three models.

Employment remains the Achilles' heel. Chile ranks fourth among OECD countries with the highest unemployment rate, surpassed only by Greece, Spain and Finland. SOFOFA has put forward a labor agenda proposing five structural reforms — among them universal severance and universal childcare — and estimates that a four-percentage-point cut in the First Category Tax, from 27% to 23%, could generate more than 210,000 jobs over four years. The head of the business association warned that "investing in Chile has become too expensive and too complex," a phrase that captures the diagnosis shared by much of the business community.

The coming week will concentrate several simultaneous inflection points: the Senate must rule on Tuesday on the constitutional impeachment against former Finance Minister Nicolás Grau, the outcome of which could shift the political balance around the mega-reform; the Superintendency of Pensions will launch the public consultation on the new generational funds that will replace the multifondos in April 2027; and the market will keep watching whether the peso manages to stabilize or whether the depreciation streak turns into the longest in nearly a decade. The fiscal thermometer, however, will remain the indicator that matters most to those financing Chile's sovereign debt.